Bursa Derivatives launches enhanced bond futures
PETALING JAYA: Bursa Malaysia Derivatives (BMD) has launched enhanced features for the three, five and 10-year Malaysian bond futures, better known as FMG3, FMG5 and FMGA respectively.
In a statement yesterday, BMD chairman and Bursa Malaysia Bhd CEO Datuk Seri Tajuddin Atan said the enhancement of FMG3 and FMGA are intended to make the products more appealing to investors and hedgers, which were only available for FMG5 previously.
“In addition, the extended trading hours offer greater flexibility to traders to seize any opportunistic market movements,” he added.
The stock exchange said the enhancement would also create a “Malaysian Sovereign Bond Futures Curve”, which serves as a benchmark for local and foreign investors to estimate the impending interest rates while managing their physical cash Malaysian Government Securities (MGS) exposures.
Almost 50% of the MGS contracts are foreign holdings, it noted.
The enhanced features of the products are in three areas: the extension of the close of trading time from 5pm to 6pm for FMG3 and FMGA; final settlement price is now derived from the volume weighted average prices mechanism; eligibility within the basket of bonds is now widened for FMG3 and FMGA, where the maturity range for FMG3 increased from a range of two-and-a-half to three-and-ahalf years to two to four years, while FMGA is extended from eight to ten years, to eight to eleven years.
The changes were made after industry consultation and approval from the Securities Commission in July this year. FMG3, FMG5 and FMGA falls within the financial product category.